Southwest Public Service Company New Mexico and Texas 2023 Rate Cases
Synapse provided expert witness support for Sierra Club in Southwest Public Service Company’s (SPS) 2023 Rate cases in both New Mexico and Texas. Our testimony and analysis focused on SPS’s request to change both the retirement date of the Tolk power plant and its operational practices. Specifically, SPS’s request to accelerate the retirement of the Tolk coal plant from the currently planned date of end of year 2032 to end of year 2028, based on higher near-term gas prices and falling renewable costs. We also reviewed SPS’s request to resume year-round operations at the plant between now and when it retires. SPS is currently operating the plant in conservation mode based on its limited and diminishing water supply and does not have sufficient economically recoverable water at Tolk to allow it to operate year-round between now and 2032.
We found that the cost to maintain Tolk beyond 2028 exceeds the risks of continued reliance on the plant and we supported SPS’s proposal for an accelerated retirement. We found that it would be lower cost to retire the plant and replace it with lower cost alternatives. But, on SPS’s proposal to increase operations at Tolk, we expressed our concerns that SPS had not modeled a scenario where the plant both retired early and maintained reduced seasonal operations. Such a plan would reduce the risks to ratepayers of running out of water and would reduce emissions as well as plant costs. We expressed concern that SPS was not fully capturing the likely impacts of the proposed Good Neighbor Rule on the operational costs at Tolk.
We recommended that SPS maintain limited seasonal operations at the plant to preserve water and optionality, or at a minimum agree to commit and dispatch the plant economically into the SPP market, with its bid inclusive of the full NOx compliance cost. We also recommended that SPS act swiftly to bring online replacement clean energy resources and battery storage.